Inflation forcing many Americans to delay retirement

A recent survey indicates that inflation is compelling many Americans to reconsider their retirement plans. A growing number of Americans nearing retirement or already retired are delaying their retirement or returning to the workforce due to rising prices. The F&G Annuities & Life survey found that more than two out of three (68%) of pre-retirees plan to push back their retirement, an increase from 64% last year. Among the respondents, 44% cited inflation as the reason for altering their plans. The lingering effects of high prices, despite moderation in inflation, and the Federal Reserve’s efforts to curb inflation by raising borrowing rates have impacted many individuals. Some respondents also mentioned that reentering the workforce offers intellectual challenges, with one-third stating they are delaying retirement because they love their work and enjoy the mental stimulation it provides. “This remains a challenging macroeconomic environment to navigate for those close to or in retirement,” F&G CEO Chris Blunt said. “Americans are still reconsidering what retirement means to them, which may look different from previous generations. Taking a proactive approach in financial planning can help mitigate some economic risks and allow people to focus on their personalized retirement roadmap.” The survey also highlighted that Generation X is particularly concerned about inflation’s impact on retirement plans.

Inflation’s impact on retirement timelines

According to the survey, 71% of Gen Xers are considering or have delayed their retirement date, up from 65% last year. Beyond inflation, 49% of this generation are worried they haven’t saved enough money to retire, and 42% desire more financial options and a larger safety net. F&G President John Currier emphasized, “As Gen Xers near retirement, their worries are heightened. Having the right advice and financial tools can help alleviate these concerns, including engaging with a financial professional and considering products like fixed indexed annuities (FIAs) and registered index-linked annuities (RILAs) that offer a mix of upside potential and downside protection.” Workers estimate they need $1.5 million to retire comfortably. However, many are far from this target. A Northwestern Mutual survey revealed that a third of workers have less than $50,000 in savings and investments, and 14% have less than $1,000. Only half of Boomers (49%) and Gen Xers (48%) believe they will be financially prepared to retire comfortably, with many expecting to outlive their savings. More concerning, over a third of older Americans have not addressed this anticipated shortfall. Aditi Javeri Gokhale, Northwestern Mutual’s chief strategy officer, noted, “People’s ‘magic number’ to retire comfortably has reached an all-time high, and the gap between their goals and progress has never been wider. Inflation is expanding our expectations for retirement savings and putting the pressure on to plan and stay disciplined.”